1. Company Oriented Marketing Strategy
Professor Joel Huber
Marketing 360
Marketing Management
Fuqua School of Business
Oldies but goodies

2. Agenda Strategic Planning Marketing Planning BCG Matrix GE Matrix
Core Competencies: SWOT analysis

3. Marketing Strategy
“More than half the polled executives at 250 corporations ranked Marketing as the most important element of strategy”
(Yankelovitch, Skelly & White Survey 1995)
Why? Strategy is necessarily externally focused and so is marketing

4. Strategic Planning and Marketing Planning
* Situation Assessment
* Organizational Mission
* Org. Objectives
* Org. Strategies
Marketing Planning
* Marketing Objectives
* Marketing Strategies
Target Market
Marketing Mix
* Marketing Plans
What are other components of organizational strategy?
--Financial strategy, risk return, sources of funds
Personnel strategy—What kinds of people do we want working here, what incentives
Informational strategy—Information flows within the corporation
Manufacturing strategy—where we get value added in the value stream
Ethical strategy—What constraints do we put on our actions…what goals do we have beyond shareholder value
Note how this is changing: The value of a centralized unit to plan has received little empirical support in the last 20 years.
Portfolio Analysis
Implementation
Control

5. Corporate Strategic Planning
Identify Strategic
Business Units
(SBU’s)
Analyze, Evaluate
Current Business
Portfolio
Identify New
Business Arenas
to Enter
Define
Corporate
Mission

6. 1. Define Corporate Mission
What is our business?
Who is the customer?
What is the value to the customer?
What will our business be?
What should our business be?
How would this be defined in terms of the business you are in?
Define Competitive scope Market scope
Vertical scope
Distinctive competence
Product/market scope
-Peter Drucker

7. 2. Identify SBUs Single business standing alone from rest of company
Having own competitors and customers
Has own manager who is responsible for strategic planning and profit
This definition has both a political and a strategic component

8. 3. Evaluate the Current Business Portfolio
The Boston Consulting Group (BCG) Matrix
The General Electric (GE) Approach
Both of these were developed in the early to mid 80’s, but they strong impact on current management thinking

9. Portfolio Analysis: The BCG Matrix
???
Based on the
principle of
balancing cash
flows
Invest
STAR
PROBLEM
CHILD
High
>10%
Reinvest
Cash Flow No
Invest
Cash Required
Growth &
Low
<10%
BCG came on the business strategy in the mid ’80 and had an enormous impact.
Dimensions focus attention on Dominance compared with biggest competitor: How many competitors can be cash cows? One!
Real growth of at least 10% per year: involves tremendous investment in infrastructure to grow. Problem of scale..
Divest
Cash Flow
CASH COW
DOG 10 1
Relative Market Share
wrt Biggest Competitor

10. Portfolio Analysis: The BCG Matrix

11. Portfolio Analysis: The BCG Matrix
The idea is to transform selected problem children to stars and then once they are dominant and the market slows then milk them for to develop more problem children and support more stars.

12. Why BCG was so successful
Barnyard metaphor
Two dimensions: Growth and Share
Was an engine for change
Balanced cash flows and focused executive attention on high growth areas
Helped management make difficult decisions
Milk cows, support winners, select breeding stock and shoot dogs

13. How BCG became obsolete
Cash flow became less of an issue with more efficient capital markets and lower interest rates
Process could be manipulated by defining the market narrowly or broadly
Multiple companies could not jointly pursue a strategy to be #1, but they tried…with disastrous consequences
The last point is critical for strategic thinking. Like any product a strategic idea only creates wealth if others are not doing it…

14. The General Electric Model5
High
3.33
MARKET ATTRACTIVENESS
Medium
1.67
GE was the father of corporate planning…this is their model.
Low 5
Strong
3.33
Medium
1.67
Weak
BUSINESS STRENGTH

15. Evaluating Market Attractiveness and Business Strength
Notice that elements of BCG are here we have market growth and market share, but other issues as well.
The process of determining weights and information makes strategy formulation a more bottom up process. Management is involved and buys into it.

16. Management Strategies5
Protect
Position
Invest
to Build
Build
Selectively
High
3.33
Build
Selectively
Selectivity/
Manage for
Earnings
Limited
Expansion
or Harvest
MARKET ATTRACTIVENESS
Medium
1.67
Protect and
Refocus
Manage for
Earnings
Divest
We have a more nuanced version of the barnyard metaphor.
Low 5
Strong
3.33
Medium
1.67
Weak
BUSINESS STRENGTH

17. Problems with portfolio models
Subjective inputs lead to self-confirming strategies
Lack of independence of SBU
Cannibalization
Synergy
Works best with companies at the edges
As SBU’s today become more independent, the need for corporate level planning diminishes. The need for SBU level marketing planning does not.

18. The Marketing Plan - Integrating the 3 C’s and the 4 P’s -
Current marketing situation (3 C’s)
Opportunity and issue analysis (3 C’s)
Objectives
Marketing strategy (4 P’s)
Action programs (4 P’s)
Project profit-and- loss statement
Background data on sales, costs, profits, market, competitors, distribution, and environment.
Identifies the main opportunities/threats, strengths/weaknesses.
Defines plan’s financial and marketing goals in terms of sales volume, market share, and profit.
Presents the broad marketing approach that will be used to achieve the plan’s objectives.
Presents the special marketing programs designed to achieve the business objectives.
Forecasts the plan’s expected financial outcomes.
Adapted From: Philip Kotler, Marketing Management, pg. 89.

19. SWOT: Strengths and Weaknesses

20. SWOT: Opportunities and Threats
Success Probability
Probability of Occurrence
High
Low
High
Low 1 2 1 2
High
High
Attractiveness
Seriousness
Low 3 4
Low 3 4
Opportunities - e.g., Technology
1. ___________________
2. ___________________
3. ___________________
4. ___________________
Threats - e.g., competitor
1. ___________________
2. ___________________
3. ___________________
4. ___________________

21. Agenda: Key Take Aways Strategic Planning Marketing Planning
BCG Matrix
GE Matrix
Marketing Planning
SWOT analysis